Elizabeth Warren Reads Riot Act to Holder for Not Prosecuting Big Bank Mortgage Fraud


Elizabeth Warren gobsmacked

Today the Justice Department filed a lawsuit against the Texas voter ID law. That is welcome news, and it's great to see Attorney General Holder step up like that. However, he needs to be equally aggressive with prosecuting bank mortgage fraud.

Your Daily Dose of BuzzFlash at Truthout, via my pal Mark Karlin:

Okay, so Senator Warren actually wrote a polite, detailed letter to Attorney General Holder. There was no shouting or acrimony. [...]

It may be professional in tone, but Warren's letter is a direct challenge to the criminal impunity and limited fines that the DOJ has provided to Wall Street and their multiple schemes to defraud both mortgage borrowers and investors.

The Huffington Post featured the letter, which bluntly states:

I am concerned that this might be yet another example of the federal government's timid enforcement strategy against the nation's largest financial institutions. I believe that if DOJ and our banking regulatory agencies prove unwilling over time to take the big banks to trial or even require admission of guilt when they cheat consumers and break the law -- either out of timidity or because of a lack of resources -- then the agencies lose enormous leverage in settlement negotiations.

There are a number of federal agencies involved in the lax regulation and minimal punishment (no jail time) of the financial industry for its role, particularly in the creation of a toxic subprime mortgage scam that played a key role in the economic collapse that burst open in the autumn of 2007.  [...]

However, some readers have written e-mails blaming mortgage borrowers for their own plights.  This may be accurate in some cases, but the massive defaults that have occurred have come from so many different kinds of lending fraud that it is difficult for the average consumer of news to keep up with them.  And it is proven that minority communities were targeted for fraud and manipulation by lenders.

To name just a few, banks targeted minority communities for second "balloon" mortgages without fully disclosing the terms or expanding mortgage payments.  Banks re-possessed homes through robo-signing of foreclosure notices without examining if the houses were actually behind in payments or the details of the chain of ownership.  Bank employees were told not to speak publicly about the deceptive practices employed to push usurious lending.   Banks would make "adjustment" agreements with some under the water homeowners only to sell blocks of mortgages to secondary lenders who wouldn't honor the agreements and, instead, sold the foreclosed homes and properties to investors such as the Blackstone Group. Even investors were not fully informed of the risks of bundled mortgages. [...]

One key factor that Warren alludes to is that by not appropriately applying legal sanctions against those who abused the mortgage system, citizens are left to think that the mortgage holders are solely at fault, because the DOJ is protecting the mortgage lenders rather than those struggling to save their houses, families and dreams from predatory and deceptive practices.

Please read the entire post here.

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  • Mark

    I thought the links were beneficial to the spirit of the post. I am sorry to add the extra work on you guys...should I quit adding links? Let me know. Again, love the site and while I am not a pure progressive I certainly hope some of you guys come around a bit more to some libertarian ideas that Progressives can agree with. I also hope to see this particular side offered here on the issues (mostly the serious ones 🙂

  • Mark, FYI, it takes awhile for us to moderate comments with links. Please read our guidelines.

  • Every change starts slow.

  • Mark

    Your response is noble, and I agree with you, but historical precedent would indicate that any serious reform of the financial system is much ado about nothing. Plenty of people are and were pissed off and little was done. What makes you think something will change when pockets are stuffed and principles are sold out?

  • pigboy

    It is more than a line in the sand. She is speaking out about the elephant in the living room. She is spot on and makes sense. When people get a chance to listen, then people get pissed off and hopefully those pissed off people act. We need to support her and her actions.

  • Mark

    Warren is spot on. However, this is largely a symbolic line in the sand and nothing more. Her efforts will be muted by lobbyists and campaign dollars. The Good Ole' Boys network loves the D and R with equal fervor.